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Stock Fluctuation
Stocks, on average, hit their lows from one to four months after jumping to a larger exchange, they fall an average of 33% from their graduation price. As a matter of fact, only two of the thirty stocks analyzed managed to never fall below their graduation price. This means that there is a 93% chance that your stock will drop in value following its move to a larger exchange. Extremes found during this timeframe were a gain of 11% and a loss of 70%. So, according to the analysis of thirty stocks that graduated from the OTCBB to larger exchanges from October 2004 to October 2005, you have a 7% chance of making a maximum gain of 11% and a 93% chance of taking a bath of up to 70% in the first three to four months following the graduation your stock to a larger exchange. This is definitely not good.
This is not intended for you to lose heart. Additional analysis of these stocks showed that six months after graduating to a larger exchange, these stocks ended up 1-2% above their graduation price. You probably wonder “what’s the big deal about it?” What is so great about a 2% gain after holding a stock for so long? What about the triple digit gains that were supposed to accompany the move to a larger exchange? Before we proceed with this article, let's get one thing straight. In most cases, there are no instantaneous astronomical gains when a stock graduates from the OTCBB. We are going to put an end to that not well conceived thought right here and now. Instead, we must focus on how we can use this new knowledge to our advantage. For starters, the results of this analysis strongly suggest selling and taking a profit when a stock graduates to a larger exchange. According to the analysis of the graduated OTCBB stocks for 2004-2005, if you held your position, there was a 93% chance that you would lose money in the subsequent three to four months. If you chose to take a profit upon graduation, it would then behoove you to strongly monitor stock and consider retaking a position during the next three to four months. During this timeframe, graduated stocks lost an average of one third of their pre-graduation value. We also know that by six months subsequent of the graduation, these same stocks settled at 1-2% above their pre-graduation value. If everything panned out according to the averages, there is a chance for a quick 35% gain! The key is timing and we all know that no one has the accurate response for that.